Thursday, April 26, 2018

There is a lot of liquidity here in Asia. But offsetting that, there is also a lot of debt and the debt level in the world nowadays as a percent of the economy is more than 50% higher than it was in 2007 before the crisis occurred. We had this modest economic expansion since June 2009 but it was driven by money printing and credit and we have reached probably the level of credit where additional credit will not do much good.

India from a longer term point of view is still a good proposition but India is not exactly a problem-free country. There is leverage in the system and there has been fraud and there are still some unsettled political events that may happen.

I would say given that the market has actually rallied very strongly over the last few years and that we have reached a high at 36400 on January 29th , we could easily decline by around 20% from the highs that would take us below 30000. Long term, I am optimistic but we have to realise that if one asset class goes down, fund managers will also sell another one even though the fundamentals may be favourable but they just get out and build up their liquidity because on institutional side, the funds are holding very little liquidity. So, they may build up liquidity and that can then bring about selling pressure everywhere.

I do not think that dynamics have changed a lot. I still have a view that over the next 10 years, you will make more money in India than say in the US. In fact, looking at the various economies around Asia and the world, I would feel reasonably confident to say that India has a growth potential of say approximately 6% per annum which to Indians may not sound a lot but that is much better than the Europe and the US.

I do not think that this is a problem. The problem in India is more that Modi has some difficulties in reducing the still enormous bureaucracy. It may have improved somewhat but there’s still a lot of bureaucracy and there are still a lot of bad loans in the books of banks and then there is also the valuation issue. Blue chips in India sat at 40-50 times earnings. I do not consider that to be a low valuation. These factors could easily contribute to a big -- 20-30% disruption.

Monday, April 23, 2018

In an interview with ET Now, Marc Faber, The Gloom, Boom & Doom Report, says long term, he is optimistic about India but if one asset class goes down, fund managers will also sell another one even though the fundamentals may be favourable.

Friday, April 13, 2018

My guest in this interview is Dr Marc Faber. Dr. Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura.

He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude. Between 1970 and 1978, Dr Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong.

Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, MARC FABER LIMITED which acts as an investment advisor and fund manager.

Friday, April 6, 2018

I was expecting a correction a long time ago. It has not happened but when it happens, it happens in a more severe manner. So far, it has not happened very severely in the US. We are down not even 10% from the January 26 high. In India, we are down about 10% from the January 29 highs but it is not yet a big correction by historical standards. A correction would be a 20% decline and the bear market would be something like a 40% decline. It is nothing very serious yet but it may become very serious in the future.

I was expecting a correction a long time ago. It has not happened but when it happens, it happens in a more severe manner. So far, it has not happened very severely in the US. We are down not even 10% from the January 26 high. In India, we are down about 10% from the January 29 highs but it is not yet a big correction by historical standards. A correction would be a 20% decline and the bear market would be something like a 40% decline. It is nothing very serious yet but it may become very serious in future.

In terms of interest rates, historically, our standards have been at the lowest level in the history of mankind from say 3000 BC up to now. So, in 5,000 years of history, we have never been this low.

In the US, the low for the 10 years treasury was at 1.37% in July 2016 and in Europe, in many cases, there have been negative interest rates...